The Next Phase of North American Integration. NAFTA to be Swallowed up by the Trans-Pacific Partnership (TPP)?

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U.S. Secretary of State John Kerry with Canadian Foreign Minister John Baird and Mexican Foreign Secretary Jose Antonio Meade.

U.S. Sec­re­tary of State John Ker­ry with Cana­di­an For­eign Min­is­ter John Baird and Mex­i­can For­eign Sec­re­tary Jose Anto­nio Meade.

In prepa­ra­tion for the upcom­ing North Amer­i­can Lead­ers Sum­mit which (was) held in Tolu­ca, Mex­i­co on Feb­ru­ary 19, U.S. Sec­re­tary of State John Ker­ry … held a meet­ing with his Cana­di­an and Mex­i­can coun­ter­parts. Over the last num­ber of years, not as much atten­tion has been giv­en to the tri­lat­er­al rela­tion­ship. Instead, the U.S. has essen­tial­ly pur­sued a dual-bilat­er­al approach with both Cana­da and Mex­i­co on key issues includ­ing bor­der and con­ti­nen­tal perime­ter secu­ri­ty, as well as reg­u­la­to­ry and ener­gy coop­er­a­tion. On the heels of its 20th anniver­sary, there once again appears to be renewed inter­est in broad­en­ing and deep­en­ing the NAFTA part­ner­ship as part of the next phase of North Amer­i­can inte­gra­tion.

On Jan­u­ary 17, U.S. Sec­re­tary of State John Ker­ry host­ed the North Amer­i­can Min­is­te­r­i­al with Cana­di­an For­eign Min­is­ter John Baird and Mex­i­can For­eign Sec­re­tary Jose Anto­nio Meade. The dis­cus­sions cen­tered around top­ics such as reg­u­la­to­ry, ener­gy and trade rela­tions, along with bor­der infra­struc­ture and man­age­ment. The meet­ing was used to lay the ground­work for next month’s North Amer­i­can Lead­ers Sum­mit which will include the par­tic­i­pa­tion of U.S. Pres­i­dent Barack Oba­ma, Cana­di­an Prime Min­is­ter Stephen Harp­er and Mex­i­can Pres­i­dent Enrique Pena Nieto.

Dur­ing a press con­fer­ence, a reporter asked about reopen­ing NAFTA in order to update it. Sec­re­tary Ker­ry answered, “the TPP, is a very crit­i­cal com­po­nent of sort of mov­ing to the next tier, post-NAF­TA. So I don’t think you have to open up NAFTA, per se, in order to achieve what we’re try­ing to achieve.” Min­is­ter Baird added, “we believe that NAFTA’s been an unqual­i­fied suc­cess, the Trans-Pacif­ic Part­ner­ship (TPP) trade nego­ti­a­tions, which all three of us are in, offer us the oppor­tu­ni­ty to strength­en the tri­lat­er­al part­ner­ship.” Sec­re­tary Meade also chimed in, “We do not think it is nec­es­sary to reopen NAFTA, but we think we have to build on it to con­struct and revi­tal­ize the idea of a dynam­ic North Amer­i­ca.”

In Decem­ber 2013, the Mia­mi Her­ald report­ed that the Oba­ma admin­is­tra­tion, “is explor­ing a region­al trade plan for the Amer­i­c­as that would be the most ambi­tious hemi­spher­ic ini­tia­tive in years.” It went on to say that Sec­re­tary of State John Ker­ry, “would like to first seek an agree­ment to deep­en the exist­ing North Amer­i­can Free Trade Agree­ment (NAFTA) with Mex­i­co and Cana­da, and to expand it after­ward to the rest of Latin Amer­i­ca.” Accord­ing to some of Kerry’s top aides, “the plan to relaunch NAFTA could come as ear­ly as Feb­ru­ary, when Pres­i­dent Barack Oba­ma is sched­uled to meet with his Mex­i­can and Cana­di­an coun­ter­parts at a North Amer­i­can Lead­ers’ Sum­mit in Mex­i­co.” The recent arti­cle, U.S. lays out goals for NAFTA cau­tioned that, “the shared goal of a NAFTA 2.0 that wins fresh, sus­tain­able gains for Cana­da, Mex­i­co and the U.S., the Amer­i­cans warn, is unlike­ly to come in a sin­gle, dra­mat­ic and eas­i­ly digestible sound byte.” It fur­ther not­ed that, “Instead, the Amer­i­cans are urg­ing a more real­is­tic approach aimed at reviv­ing tri­lat­er­al momen­tum, with a dogged diplo­mat­ic effort that aggres­sive­ly fine-tunes, stream­lines and expands the trade pact.”

Last year, busi­ness lead­ers from across North Amer­i­ca released a set of pol­i­cy rec­om­men­da­tions designed to increase con­ti­nen­tal eco­nom­ic inte­gra­tion and com­pet­i­tive­ness. In a let­ter issued to Pres­i­dent Barack Oba­ma, Prime Min­is­ter Stephen Harp­er and Pres­i­dent Enrique Pena Nieto, the Busi­ness Round­table, the Cana­di­an Coun­cil of Chief Exec­u­tives and the Con­se­jo Mex­i­cano de Hom­bres de Nego­cios called for greater tri­lat­er­al gov­ern­ment action in the areas of intel­li­gent bor­der sys­tems, reg­u­la­to­ry stan­dards and prac­tices, as well as North Amer­i­can ener­gy secu­ri­ty and sus­tain­abil­i­ty. The busi­ness orga­ni­za­tions explained that, “More can and should be done to pro­mote reg­u­la­to­ry coop­er­a­tion between our three coun­tries, to facil­i­tate the legit­i­mate move­ment of peo­ple, goods and ser­vices.” They empha­sized that the time to act was now and that their spe­cif­ic pro­pos­als would, “help deep­en our eco­nom­ic ties, strength­en the inter­na­tion­al com­pet­i­tive­ness of Cana­di­an, Mex­i­can, and U.S. com­pa­nies and their work­ers, and real­ize North Amer­i­can ener­gy self-reliance.” Their goal is to cre­ate a seam­less North Amer­i­can mar­ket.

At the third annu­al North Amer­i­can Com­pet­i­tive­ness and Inno­va­tion Con­fer­ence in Octo­ber 2013, gov­ern­ment offi­cials, trade experts and lead­ers rep­re­sent­ing the pri­vate and aca­d­e­m­ic sec­tors from all three coun­tries gath­ered to dis­cuss strate­gies aimed at boost­ing NAFTA ties. Among the atten­dees were U.S. Sec­re­tary of Com­merce Pen­ny Pritzk­er, Cana­di­an Min­is­ter of Inter­na­tion­al Trade Edward Fast, and Mex­i­can Sec­re­tary of Econ­o­my Ilde­fon­so Gua­jar­do. In a joint state­ment, they agreed to strength­en their trade and eco­nom­ic rela­tion­ship. The min­is­ters, “com­mit­ted to craft­ing a roadmap that both pro­motes pros­per­i­ty across the NAFTA region for the next 20 years and main­tains our posi­tion as the most com­pet­i­tive region in the world.” They also pledged to enhance, “reg­u­la­to­ry coop­er­a­tion, and coor­di­nat­ed efforts to facil­i­tate increased trade through many ini­tia­tives, includ­ing the ongo­ing Trans-Pacif­ic Part­ner­ship (TPP) nego­ti­a­tions.” With NAFTA as the foun­da­tion, the U.S., Cana­da and Mex­i­co are work­ing towards tak­ing their tri­lat­er­al part­ner­ship to the next lev­el.

In the report North Amer­i­can Com­pet­i­tive­ness: The San Diego Agen­da, Lau­ra Daw­son, Christo­pher Sands, and Dun­can Wood exam­ine the evo­lu­tion of the NAFTA and pro­vide a blue­print for deep­en­ing tri­lat­er­al inte­gra­tion. This includes a host of rec­om­men­da­tions deal­ing with har­mo­nized region­al trade pol­i­cy, reg­u­la­to­ry align­ment, bor­der and infra­struc­ture, as well as human cap­i­tal and ener­gy. As far as a reg­u­la­to­ry strat­e­gy goes, the paper called for the U.S.-Canada Reg­u­la­to­ry Coop­er­a­tion Coun­cil and the U.S.-Mexico High-Lev­el Reg­u­la­to­ry Coop­er­a­tion Coun­cil to be coor­di­nat­ed with­in a tri­lat­er­al frame­work. In the area of bor­der secu­ri­ty and effi­cien­cy, it also rec­om­mend­ed that Mex­i­co be includ­ed in the U.S.-Canada Beyond the Bor­der ini­tia­tive.

The report stat­ed that, “North America’s future demands deep­er inte­gra­tion of our economies and stream­lined cross-bor­der process­es. Essen­tial ele­ments in ensur­ing long-term com­pet­i­tive­ness include infra­struc­ture spend­ing, ener­gy coop­er­a­tion, invest­ing in human cap­i­tal for­ma­tion, increas­ing labor mobil­i­ty and labor mar­ket flex­i­bil­i­ty, reg­u­la­to­ry coop­er­a­tion and more effi­cient bor­der man­age­ment.”

When it comes to fur­ther advanc­ing North Amer­i­can inte­gra­tion, the exten­sive pol­i­cy paper rein­forced the mes­sage that, “Tri­lat­er­al­ism is about the long game. Bilat­er­al­ism may move faster but can­not move as far.” It also stressed now that, “NAFTA has been insti­tu­tion­al­ized, it is sus­tained by work­ing-lev­el incre­men­tal­ism, and its ben­e­fits are erod­ing. It is time for a new leap of faith.”

With respects to a shared North Amer­i­can Vision, Lau­ra Daw­son described how, “A win­dow of oppor­tu­ni­ty for impor­tant pol­i­cy change is rare and actions involv­ing mul­ti­ple gov­ern­ments, inter­ests and stake­hold­ers are dif­fi­cult. I am con­vinced that it is time for action and that it will be a long while before there is a sim­i­lar con­ver­gence of oppor­tu­ni­ty and inter­est.” The report that Daw­son helped put togeth­er con­clud­ed that, “the biggest imped­i­ment to progress is a lack of polit­i­cal lead­er­ship.” That is why many who are push­ing this agen­da are hop­ing that the upcom­ing North Amer­i­can Lead­ers Sum­mit will help revive the NAFTA spir­it and be used as launch­ing pad for greater tri­lat­er­al col­lab­o­ra­tion.

After 20 years of NAFTA, there is a grow­ing sense from pro­po­nents of the deal that the time is right to take new steps towards North Amer­i­can eco­nom­ic inte­gra­tion. Beyond all those who view NAFTA as a suc­cess, there is a dark side and a lega­cy of bro­ken promis­es. When NAFTA was intro­duced, it rep­re­sent­ed the archi­tec­ture for a new inter­na­tion­al sys­tem. It became the tem­plate for future trade agree­ments which have been used to pro­mote even greater cor­po­rate con­trol. The TPP nego­ti­a­tions which are cur­rent­ly under­way would expand the failed NAFTA mod­el to even more coun­tries. Fur­ther­more, with the U.S., Cana­da and Mex­i­co all a part of the mas­sive trade talks, it also pro­vides an oppor­tu­ni­ty to upgrade NAFTA with­out hav­ing to reopen it.